Issue of Poverty Underestimation
Summary
*Syllabus: Poverty * *Source: TH* **Context:** The 2023-24 Household Consumption Expenditure Survey (HCES) revealed a decline in urban and rural poverty, amid ongoing debates on data comparability, availability, and defining an adequate consumption basket for the poverty line. **About Poverty Data in India:** • **HCES 2023-24:** Reports rural poverty reduced to 7.2% and urban poverty to 4.6% compared to 25.7% and 13.7%, respectively, in 2011-12. • **Multidimensional Poverty Index (MPI):** **
Exam Brief
GS-3The HCES 2023-24 shows a decline in poverty. UPSC cares because poverty estimation impacts policy and resource allocation. The Rangarajan Committee pegged 2011-12 poverty at 29.5%.
Key Facts
- Rural poverty reduced to 7.2% in 2023-24 (HCES).
- Urban poverty reduced to 4.6% in 2023-24 (HCES).
- MPI dropped to 11.28% in 2022-23 from 29.17% in 2013-14 (NITI Aayog).
- Rangarajan Committee (2014) pegged 2011-12 poverty at 29.5%.
- Tendulkar Committee pegged 2011-12 poverty at 21.9%.
Prelims — What UPSC Might Ask
- What are the different methods used for poverty estimation in India?
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Source Article Content
*Syllabus: Poverty *
Source: TH
Context: The 2023-24 Household Consumption Expenditure Survey (HCES) revealed a decline in urban and rural poverty, amid ongoing debates on data comparability, availability, and defining an adequate consumption basket for the poverty line.
About Poverty Data in India:
• HCES 2023-24: Reports rural poverty reduced to 7.2% and urban poverty to 4.6% compared to 25.7% and 13.7%, respectively, in 2011-12. • Multidimensional Poverty Index (MPI): NITI Aayog (2022-23): Multidimensional poverty dropped to 11.28% from 29.17% in 2013-14. Global MPI** (2019-21):** India halved its MPI value, with 135.5 million people escaping poverty. • NITI Aayog (2022-23): Multidimensional poverty dropped to 11.28% from 29.17% in 2013-14. • Global MPI** (2019-21):** India halved its MPI value, with 135.5 million people escaping poverty. • World Bank Estimate: Using $2.15/day as a poverty line, extreme poverty was 11.9% in India in 2019. • Other Reports: The Rangarajan Committee (2014) pegged 2011-12 poverty at 29.5%, higher than the Tendulkar Committee’s 21.9%. Is Poverty Underestimated in India?
Yes, Poverty is Underestimated
• Dated Poverty Lines: The poverty line by Tendulkar (₹33/day urban, ₹27/day rural) and Rangarajan (₹47/day urban, ₹30/day rural) fails to reflect rising living costs. E.g. A nutritious diet is unaffordable for 74% of Indians (World Bank).
• Multidimensional Deprivations: While multidimensional indices highlight improved access to electricity and sanitation, income-based poverty persists. E.g. Informal sector workers lack financial security despite basic amenities.
• Data Gaps: Absence of Census 2021 limits accurate rural-urban poverty differentiation. E.g. Rural areas transitioning into peri-urban zones distort poverty statistics.
• Inconsistent Methodologies: Changing recall periods in surveys inflate consumption expenditure, lowering poverty estimates artificially. E.g. Shifts to MMRP (modified mixed reference period) reduce poverty estimates by boosting expenditure figures.
• Exclusion Errors in Welfare Schemes: Despite flagship programs, implementation gaps exclude the most vulnerable. E.g. Leakages in MGNREGA and Pradhan Mantri Awas Yojana.
No, Poverty is Not Underestimated:
• Substantial Poverty Reduction: Reports like NITI Aayog’s MPI and HCES showcase consistent poverty decline over decades. E.g. Over 24.82 crore people escaped multidimensional poverty between 2013-14 and 2022-23.
• Improved Welfare Programs: Initiatives like PMJDY, SBM, and PMUY have improved living standards. E.g. Universal access to bank accounts (PMJDY) fosters financial inclusion.
• Decline in Calorie-Based Poverty: Diversified rural consumption indicates improved living conditions beyond subsistence. E.g. Rural spending on services increased, reflecting better quality of life.
• Global Comparisons Validate Progress: India’s MPI and poverty reduction rates align with UN and World Bank assessments. E.g. UNDP’s MPI highlights a halving of poverty since 2015-16.
• Economic Growth Contribution: High GDP growth and reduced inflation support poverty alleviation. E.g. Flagship programs like Poshan Abhiyan reduced malnutrition in vulnerable populations.
Way Ahead:
• Updated Poverty Metrics: Revisit poverty lines to incorporate rising living costs and regional disparities. • Strengthen Data Collection: Conduct Census 2021 and ensure reliable consumption surveys. • Focus on Income Poverty: Incorporate income vulnerability alongside multidimensional metrics. • Improve Welfare Delivery: Enhance targeting and transparency in welfare programs. • Promote Livelihoods: Foster rural employment through skill development and MSME support. Conclusion:
India has made remarkable strides in poverty reduction, but the debate on underestimation highlights the need for updated methodologies and robust data systems. By addressing systemic gaps and prioritizing inclusive growth, India can ensure sustainable poverty eradication and equitable development.
Insta Links:
• Welfare-scheme-debate • Pradhan Mantri Jan Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion.